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- Lyft reported second-quarter earnings that beat Wall Street’s expectations Wednesday.
- Shares rose on the news in aftermarket trading. The momentum then continued into Thursday, with Lyft’s stock climbing more than 8% in early trading.
- Analysts who cover the stock upgraded shares and raised price targets, citing the company’s path to profitability.
- Watch Lyft trade live on Markets Insider..
Things are looking up for Lyft.
Shares of Lyft rose as much as 8% in early trading Thursday, extending gains from the company’s earnings beat Wednesday.
Lyft’s second-quarter earnings report exceeded Wall Street’s expectations in both revenue and loss per share. The company reported $867 million in revenue and a loss per share of $0.68, where analysts expected revenue of $809 million and a loss of $1.74 per share.
After the solid earnings, the company also raised its guidance for the full year, saying it now expects revenue to top $3.47 billion and losses to shrink between $300 million and $875 million.
"Our Q2 results reflect the health of the market and our ongoing success driving product, platform and operational excellence," Brian Roberts, Lyft’s CFO, said on a call with analysts Wednesday.
Lyft ended the quarter with a record of 2.18 million active riders, a 41% increase on the year. Further, a major contributing factor to Lyft’s improved outlook has been the company’s recent decision to raise fares.
"The price adjustments that have been reported went into effect at the very end of June, so there was limited impact in Q2," Roberts told Bloomberg in an interview.
The report was welcome after Lyft’s first-quarter earnings release — its first as a public company — sent shares on a rollercoaster ride, stumbling more than 4% before regaining losses.
Lyft stock has been volatile since the company’s March IPO, but now shows positive signs of stabilizing as the company has a clear path to profitability ahead.
Analysts that cover the stock were pleased with the results. A team of analysts at JPMorgan raised the price target for shares to $90 from $86 and reaffirmed its overweight rating. Dan Ives at Wedbush raised his price target to $75 from $67, and upgraded shares to a rating of "outperform" from "neutral."
Analysts cited positive indicators such as active rider growth, better operating leverage, and a path to profitability. JPMorgan also noted the shift in Lyft’s lock-up period, when early investors are not allowed to sell shares for a certain time after and IPO, as a positive. Lyft moved its lock-up expiration to August 19 from September 24.
"While the revised timing likely creates more tactical considerations over the next several trading days, we view the earlier expiration as a positive as it more quickly moves Lyft beyond a key overhang," wrote JPMorgan analysts.
About 258 million shares may become available for sale when the lock-up period ends, but Lyft has said that co-founders Logan Green and John Zimmer along with CFO Brian Roberts will not be selling when the lock-up ends. They own between 5% and 6% of shares between them.
Shares of Uber, a main competitor to Lyft and IPO neighbor, also rose about 4% after Lyft’s earnings release. Analysts watching Uber are hoping that the company reports a similar earnings beat Thursday.
Shares of Lyft are down about 16% year-to-date.
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